Over a busy five days, our Analysts toured apartment, retail, manufactured housing, and skilled nursing assets in the Miami area while also participating in 33 small group or one-on-one meetings. Additionally, they sat in on industry roundtable discussions and had the opportunity to talk with fellow REIT investors. They came away from the conference with deeper knowledge as well as greater clarity on the themes we believe will shape real estate in 2023 and beyond.
Each REIT management team was asked during their presentation what the best capital allocation decision was for their company. Due to rising interest rates, macro uncertainty, and discounted share prices many inevitably and wisely said their best decision was to either pause for greater clarity or sell assets to generate proceeds to pay down debt, pair trade into higher quality assets, or buyback shares. Also, many REITs responded that they are focused on improving internal processes, often with technology, to drive growth and employee productivity.
The REIT business model is battle tested and has survived though many stressful periods including Covid and the GFC. Despite the current market volatility, we believe our investment philosophy and process focusing on high-quality companies with steady dividend growth will provide investors with long term investment horizons sufficiently attractive returns.
Finally, the risk we have highlighted since the middle of last year is what happens with the PE and unlisted funds. We still believe this is an area to watch as these entities are now facing redemptions and will need to sell properties, this will present an opportunity for well capitalised REITs.
Our big picture takeaways are that REITs are defensively positioned, even in the current environment:
- Stronger than expected leasing fundamentals but also sector bifurcation
- Capital Markets Recession, a Transaction Pause, and the Liquidity Imperative
- Rising non-controllable expenses & lease structures
- South Florida Real Estate Market Vibrant
Please read our detailed report on the conference: B&I Miami REIT Conference